Are Third-Party Logistics Providers the Future of E-Commerce?

Though expanding e-commerce is positive for a company’s bottom line, a steady uptick in order volume has the potential to strain supply chains. Most notably, during the COVID-19 pandemic, direct-to-consumer companies suddenly needed additional shipping and distribution help, as demand skyrocketed to new highs.

With e-commerce businesses scrambling, the question quickly became where this extra support could come from, whether internally or through a third-party logistics provider.

Why Use a Third-Party Logistics Provider?

The main goal of a third-party logistics provider, or 3PL, is to provide targeted support for e-commerce companies experiencing rapid expansion. Not sure if your business would benefit from a 3PL? First, consider these factors:

• What is the scope of distribution and fulfillment networks, and are there parts of the country where these systems are lacking?
• Are products consistently damaged in the shipping process?
• Are customers returning packages or leaving negative reviews?
• Are shipping lead times lagging behind, and is there evidence of labor strain?

If the answer is yes to one or more of these questions, a third-party logistics provider might be the solution your company needs to shore up its shipping processes. In fact, recent studies show that 65 percent of 3PLs are anticipating e-commerce growth in 2021, prompting them to prop up their fulfillment and protective packaging services in anticipation.

Before you decide whether a third-party logistics provider is right for your business, it’s important to understand how they operate:

Expanding Distribution and Fulfillment

The overall goal of e-commerce is to deliver products quickly, which is where 3PLs with streamlined distribution centers and speedy processing come in handy. During the pandemic, 3PLs started scaling up fulfillment locations to satisfy demand — and so far, it’s paid off.

Plus, as smaller niche markets have experienced growth, shippers have had to get creative with their processes. As a result, the most successful 3PLs have been the ones equipped to handle large amounts of orders.

In the current environment, a third-party logistics provider is an extension of their customers’ brands. The service a 3PL provides reflects directly on the companies it works with. And with 3PLs jockeying to win business across a variety of industries, they need to separate themselves with excellent service, quick and efficient fulfillment, and performance-oriented protective packaging to ensure a great unboxing experience for end customers. Pregis offers a variety of cushioning and void fill options as viable solutions to support these efforts.

Setting Standards

With a larger distribution network comes the potential for issues with process and efficiency.  As businesses continue to employ 3PLs to assist with their supply chain needs, these 3PLs are tasked with helping establish maximum efficiency, cutting costs, and ensuring products arrive on time and undamaged. That's where Pregis comes in.

With services ranging from inside-the-box protection to automated mailing and bagging, Pregis can help 3PLs raise throughput, limit product damage, and improve overall customer experience throughout the fulfillment and shipping process.

And with 86 percent of Fortune 500 companies and 96 percent of Fortune 100 companies using 3PL services, creating links in the supply chain is necessary to keep up in today’s business world. Transportation-forward 3PLs can help move goods from a factory to a warehouse. These warehouses can also be a type of 3PL service, proving to be especially helpful during the pandemic in shipping, handling, and storing returns as well as offering quick shipping turnaround.

Automating Processes

Regardless of outside circumstances, 3PLs will always focus on hitting KPIs, such as labor optimization and shipping lead times to better serve customers. When direct-to-consumer e-commerce companies use a third-party logistics provider, they’re able to take advantage of the robotics, warehouse management systems, and automated packaging systems in place that work in tandem to process large order volumes efficiently. For 3PLs to work effectively, they need the right tools at their side. Pregis’ automated poly bagging machines are a great resource for companies looking for scalable packaging equipment.

Improving Customer Experience

The goal of a third-party logistics provider is to protect products from damage during shipping and offer a great unboxing experience once that product reaches end consumers. If this process goes wrong, companies risk having to reship or pay for extra labor costs — not to mention the potential loss of a customer.

Pregis' HC hybrid cushioning is designed as an inflated film that forms a proprietary pattern of square pillows to provide product protection and reduce material consumption. It stands strong against any puncturing and is resilient during the shipping process. Plus, its clean and clear look contributes to a positive unboxing experience.

And with Pregis’ e-commerce and fulfillment solutions, including protective cushioning, wrapping, and mailing and bagging, companies can guarantee their products will remain unscathed during shipping, giving a customer the best chance at a satisfying unboxing experience.

Lessons Learned

There is a light at the end of the tunnel when it comes to the COVID-19 pandemic, but surveying and evaluating big-picture takeaways in how companies adapted and adjusted their shipping and fulfillment processes will be an ongoing process.

E-commerce was around before the pandemic, and it will be around as life begins to return to normal. Customers who have grown accustomed to shopping online will likely continue to do so, and companies should be prepared to fill the same volume of orders — or more — that they’ve seen in the past year.

Understanding how a third-party logistics provider can support these efforts is critical. Ultimately, knowing your options is the only way to make the best decision for your company. When it comes down to it, Pregis’ protective packaging and its ability to lower damage rates, streamline 3PL fulfillment, and ensure a positive customer experience are an essential part of this process.  

Need more info on Pregis' market-driven 3PL solution and consultative process?

contact us